Ontario Extends Certain Emergency Corporate Provisions in Response to Second Wave of COVID-19

Practical Law Canada Legal Update w-027-8205 (Approx. 8 pages)

Ontario Extends Certain Emergency Corporate Provisions in Response to Second Wave of COVID-19

by Practical Law Canada Corporate & Securities

Background

Earlier this year, Ontario amended the following corporate law statutes in response to the initial outbreak of the 2019 novel coronavirus disease (COVID-19):

Business Corporations Act, R.S.O. 1990, c. B.16 (OBCA).
Corporations Act, R.S.O. 1990, c. C.38 (OCA).
Co-operative Corporations Act, R.S.O. 1990, c. C.35 (CCA).
Condominium Act, 1998, S.O. 1998, c. 19.

COVID-19 was declared an emergency in Ontario on March 17, 2020 and the emergency was lifted on July 24, 2020.

Effective October 1, 2020, regulations were made extending certain temporary provisions that were added to each of these corporate statutes to May 31, 2021. Not all temporary provisions have been extended.

OBCA

The Extension of Temporary Suspension Period, O. Reg. 542/20, extends the following provisions of the OBCA:

Section 1(2) of the Schedule, which overrides any provision of the articles, by-laws or unanimous shareholder agreement (USA) of an OBCA corporation so that:
- the corporation has the option to hold a meeting of shareholders by telephonic or electronic means; and
- a shareholder who, through those means, votes at the meeting or establishes a communications link to the meeting is deemed to be present at the meeting.
Section 3 of the Schedule, which gives the chair at a meeting of shareholders the flexibility to direct voting by show of hands, ballot or other means.
Section 4 of the Schedule, which overrides any provision of the articles, by-laws or USA of an OBCA corporation so that:
- a meeting of the board of directors (or a committee of directors) of the corporation may be held by such telephonic, electronic or other communications facility to permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously; and
- a director participating in the meeting by such means is deemed to be present at the meeting.

However, O. Reg. 542/20 does not further extend the deadlines for calling and holding meetings of shareholders or sending annual financial statements.

Therefore, the deadline for holding an annual meeting of shareholders under the OBCA remains:

120 days after July 24, 2020 (when the COVID-19 declared emergency was terminated), if the deadline for holding the meeting would otherwise have fallen within 30 days after July 24, 2020. If applicable, this would extend the meeting deadline to November 21, 2020.
90 days after the declared emergency has been terminated in all other cases. If applicable, this extends the meeting deadline to October 22, 2020.

For example, suppose that a corporation has a January 31 financial year-end. In the absence of amended section 94 of the OBCA, the corporation would have been required to hold its annual meeting not later than July 31. But, because this period falls within the first 30 days after the declared emergency is terminated, the corporation has until November 21, 2020, to hold its annual meeting.

O. Reg. 542/20 does not further extend the requirement to hold the annual meeting within six months of the corporation's financial year-end.

OCA

The Extension of Temporary Suspension Period, O. Reg. 544/20, extends the following provisions of the OCA:

Sections 3 and 5 of Schedule 2, which override any provision of the letters patent, supplemental letters patent or by-laws of an OCA corporation so that:
- the corporation has the option to hold a meeting of members (or, in the case of a Part V insurance company, meeting of members and shareholders) by telephonic or electronic means;
- a member (or, in the case of a Part V insurance company, shareholder) who, through those means, votes at the meeting or establishes a communications link to the meeting is deemed to be present at the meeting;
- a meeting of the board of directors (or a committee of directors) of the corporation may be held by such telephonic, electronic or other communications facility to permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously; and
- a director participating in the meeting by such means is deemed to be present at the meeting.
Section 6, which gives the chair the flexibility to direct voting by show of hands, ballot or other means at a meeting of members.

However, O. Reg. 544/20 does not further extend the deadlines for calling and holding meetings of members or producing annual financial statements.

Therefore, the deadline for holding an annual meeting of members under the OCA remains:

120 days after July 24, 2020 (when the COVID-19 declared emergency was terminated) if the deadline for holding the meeting would otherwise have fallen within 30 days after July 24, 2020. If applicable, this would extend the meeting deadline to November 21, 2020.
90 days after the declared emergency has been terminated in all other cases. If applicable, this extends the meeting deadline to October 22, 2020.

See the example discussed under OBCA.

O. Reg. 544/20 does not further extend the requirement to hold the annual meeting within six months of the corporation's financial year-end.

CCA

The Extension of Temporary Suspension Period, O. Reg. 543/20, extends the following provisions of the CCA:

Sections 1, 3 and 4 of the Schedule, which override any provision of the CCA, articles or by-laws of co-operative corporation (including a non-profit housing co-operative) so that:
- the corporation has the option to hold a meeting of members by telephonic or electronic means; and
- a member who, through those means, votes at the meeting or establishes a communications link to the meeting is deemed to be present at the meeting.
Section 6, which gives the chair the flexibility to direct voting by show of hands, ballot or other means at a meeting of members.
Section 7 of the Schedule, which overrides any provision of the articles or by-laws of a co-operative corporation so that:
- a meeting of the board of directors (or a committee of directors) of the corporation may be held by such telephonic, electronic or other communications facility to permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously; and
- a director participating in the meeting by such means is deemed to be present at the meeting.

However, O. Reg. 543/20 does not further extend the deadlines for calling and holding meetings of members or producing annual financial statements.

Therefore, the deadline for holding an annual meeting of members under the CCA remains:

120 days after July 24, 2020 (when the COVID-19 declared emergency was terminated) if the deadline for holding the meeting would otherwise have fallen within 30 days after July 24, 2020. If applicable, this would extend the meeting deadline to November 21, 2020.
90 days after the declared emergency has been terminated in all other cases. If applicable, this extends the meeting deadline to October 22, 2020.

See the example discussed under OBCA.

O. Reg. 543/20 does not further extend the requirement to hold the annual meeting within six months of the corporation's financial year-end.

Condominium Act

The Extension of Temporary Suspension Period, O. Reg. 541/20, extends the following provisions of the Condominium Act:

Sections 1 and 2 of the Schedule, which override any provision of the by-law of a condominium corporation so that a meeting of the directors of the corporation may be held by teleconference or another form of prescribed communications system.
Section 5, which overrides any by-law of a condominium corporation so that:
- the corporation has the option to hold a meeting of owners by telephonic or electronic means; and
- an owner or a mortgagee who, personally or by proxy, through those means votes at the meeting or establishes a communications link to the meeting is deemed to be present at the meeting or represented by proxy.
Section 6, which allows voting by ballot or by telephonic or electronic means.
Section 7, which allows documents and information to be given to owners or mortgagees by electronic means.

However, O. Reg. 541/20 does not further extend the deadlines for calling and holding meetings of owners or mortgagees or producing annual financial statements.

Therefore, the deadline for holding an annual general meeting (AGM) under the Condominium Act remains:

120 days after July 24, 2020 (when the COVID-19 declared emergency was terminated) if the deadline for holding the meeting would otherwise have fallen within 30 days after July 24, 2020. If applicable, this would extend the meeting deadline to November 21, 2020.
90 days after the declared emergency has been terminated in all other cases. If applicable, this extends the meeting deadline to October 22, 2020.

See OBCA for an example.

O. Reg. 541/20 does not further extend the requirement to hold the AGM within six months of the condominium corporation's financial year-end.

Ontario Extends Certain Emergency Corporate Provisions in Response to Second Wave of COVID-19 | Practical Law